Economy

Credit card fees exceed 1% of GDP in Latin America, says BIS

The institution notes that costs are higher where there is a lack of competition

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  • Contactless payments accounted for more than 33% of transactions with cards, compared to around 27% in September last year;
  • About 1.7 billion adults globally do not have a bank account, and hundreds of millions of firms are limited to using cash.

Credit card fees exceed 1% of the Gross Domestic Product (GDP) in Latin America, according to a new report by the Bank for International Settlements (BIS), cited in an article on Valor Econômico. BIS also points out the potential for cost reduction without weighing on economic activity.

According to BIS, a global financial institution owned by central banks, retail payments are expensive for users where credit cards dominate. Card payments are a lucrative source of revenue for financial institutions and card networks. The institution notes that, in general, the payment revenue / GDP ratio, which gives an indication of costs, is higher where the banks’ net interest margin is higher, pointing to a lack of competition.

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In a special chapter on central banks and payments in the digital age, BIS points out that the covid-19 pandemic stimulated contactless payments, which accounted for more than 33% of transactions with cards, compared to around 27% in September last year.

Access to payment services has increased, but it is still far from universal. About 1.7 billion adults globally do not have a bank account, and hundreds of millions of firms are limited to using cash as their only means of payment.